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Investing.com -- Shares of Open Lending Corp. (NASDAQ:LPRO) surged 9% on Monday after Palogic Value Management, a significant shareholder, publicly advocated for the company to consider seeking a buyer. In a letter to Open Lending’s Chief Legal and Compliance Officer, Palogic disclosed a 5.8% stake and proposed that the company publicly announce its intent to explore strategic alternatives and pay off its term loan.
The investment firm, which has owned shares since 2022, expressed concerns about the company’s viability as a public entity, citing executive turnover, a limited total addressable market (TAM), and the cyclical nature of the company’s revenue as key issues. Palogic highlighted the recent decline in share price, from $40.00 in 2021 to as low as $1.05, as evidence of the market’s struggle to value the company accurately.
Palogic’s letter to Open Lending also addressed the recent profit share claw-back, which it viewed as a temporary setback rather than a survival issue. Despite this, the firm emphasized the need for the board to acknowledge the desire to pursue strategic alternatives, suggesting that the public markets may have overvalued the company for much of its tenure as a public entity.
The letter further advised Open Lending to protect its cash position and avoid acquisition opportunities unless a buyer is found. Palogic also offered to serve as a sounding board for the board’s considerations on how unaffiliated shareholders might react to potential decisions.
Palogic’s push for strategic changes at Open Lending seems to have resonated with investors, leading to a notable increase in the company’s stock price during Monday’s trading session. The market’s response underscores the significant influence that major stakeholders can have on the direction and perception of a company’s future.
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